Correlation Between Dataprep Holdings and Kossan Rubber

Can any of the company-specific risk be diversified away by investing in both Dataprep Holdings and Kossan Rubber at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dataprep Holdings and Kossan Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dataprep Holdings Bhd and Kossan Rubber Industries, you can compare the effects of market volatilities on Dataprep Holdings and Kossan Rubber and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dataprep Holdings with a short position of Kossan Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dataprep Holdings and Kossan Rubber.

Diversification Opportunities for Dataprep Holdings and Kossan Rubber

-0.68

Correlation Coefficient

Dataprep Holdings  Kossan Rubber

Excellent diversification

The 3 months correlation between Dataprep and Kossan is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dataprep Holdings Bhd and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries and Dataprep Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dataprep Holdings Bhd are associated (or correlated) with Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of Dataprep Holdings i.e., Dataprep Holdings and Kossan Rubber go up and down completely randomly.

Pair Corralation between Dataprep Holdings and Kossan Rubber

Assuming the 90 days trading horizon Dataprep Holdings is expected to generate 1.78 times less return on investment than Kossan Rubber. In addition to that, Dataprep Holdings is 1.6 times more volatile than Kossan Rubber Industries. It trades about 0.02 of its total potential returns per unit of risk. Kossan Rubber Industries is currently generating about 0.07 per unit of volatility. If you would invest  162.00  in Kossan Rubber Industries on September 4, 2024 and sell it today you would earn a total of  77.00  from holding Kossan Rubber Industries or generate 47.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Dataprep Holdings Bhd  vs.  Kossan Rubber Industries

Dataprep Holdings Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dataprep Holdings Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kossan Rubber Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kossan Rubber Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kossan Rubber disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dataprep Holdings and Kossan Rubber

The main advantage of trading using opposite Dataprep Holdings and Kossan Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dataprep Holdings position performs unexpectedly, Kossan Rubber can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kossan Rubber will offset losses from the drop in Kossan Rubber's long position.

The idea behind Dataprep Holdings Bhd and Kossan Rubber Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.